Multiple Listing Services (MLS) are independent, local marketplaces that promote innovation and make it possible for residential real estate businesses of all types and sizes to compete. The National Association of REALTORS® (NAR) provides guidelines to ensure that these local marketplaces remain pro-consumer and pro-competitive and routinely reviews these guidelines to maintain practices that increase transparency and improve the consumer experience.

Despite the fact that consumers benefit from the increased broker-cooperation that MLSs make possible, in 2019, the United States Department of Justice (DOJ) opened an investigation into NAR’s Participation Rule and Clear Cooperation Policy. Specifically, the DOJ’s Antitrust Division alleged that this rule and policy were anticompetitive and a restraint of trade.

In 2020, NAR and the DOJ began negotiating a potential settlement. Terms were ultimately agreed upon, but the draft consent judgment prepared by the DOJ contained a reservation of rights clause, declaring that nothing in the judgment would limit the DOJ’s ability to again investigate these policies in the future. NAR would not accept this term, explaining that it would not agree to a settlement without written assurances that the DOJ would close its investigation.

Ultimately, the DOJ agreed and wrote to NAR that “once the consent decree is filed, the Division will notify NAR in its closing letter that it has closed its investigation into the Participation Rule and the Clear Cooperation [Policy].” On November 19, 2020, both the DOJ and NAR announced that a settlement had been reached that required NAR to repeal or change several MLS rules and policies that the DOJ deemed anticompetitive. At that time, NAR issued a statement reading in part:

Most of the changes seek to more explicitly state what is already the spirit and intent of NAR’s Code of Ethics and MLS Policies regarding providing information about commissions and MLS participation.

As required by the settlement agreement, the DOJ thereafter sent a letter to NAR confirming that it had closed its investigation.

While the DOJ and NAR were finalizing the verbiage of the revised rules, on July 1, 2021, in what NAR called “an unprecedented breach of contract,” the DOJ filed a notice of withdrawal from the parties’ settlement and began the process of pursuing a broader investigation. In response, NAR filed a petition with the United States District Court for the District of Columbia seeking an end to the DOJ’s investigation, thereby compelling the DOJ to honor the terms of the settlement.[1]

By way of its claims asserted against the DOJ, NAR argued that the government, like any party, must be held to the terms of its settlement agreements and, on January 25, 2023, Judge Timothy J. Kelly issued a ruling in favor of NAR holding that the terms of the parties’ settlement agreement are valid and enforceable. In the court’s decision, Judge Kelly wrote:

Because the agreement included the Antitrust Division’s commitment to close its investigation into NAR’s current Participation Rule and Clear Cooperation Policy, the government breached the agreement by reopening the investigation into these same rules.

Even though the DOJ has the option to appeal the court’s decision, NAR General Counsel Katie Johnson expressed that “this is a clear victory” and “NAR is delighted the DOJ is now bound to honor its agreement.”

Johnson concluded her remarks by reiterating NAR’s commitment to “act in the best interests of home buyers and sellers across the country.”

About the Author:

Scott M. Drucker, Esq., a licensed Arizona attorney, is the Chief Executive Officer for the Arizona Association of REALTORS®. This article is of a general nature and reflects only the opinion of the author at the time it was drafted. It is not intended as definitive legal advice, and you should not act upon it without seeking independent legal counsel.

[1] While the court was considering the petition, NAR still moved forward with the terms of the settlement and amended the subject polices as had been agreed upon.